Kutztown University, Shock Doctrine, and Snake Oil Tales

I arrived at Kutztown University in the fall of 2002. With the exception of one year, the university has been plagued with persistent budget crises – or at least talk of them – last year being the most serious, resulting in the elimination of several programs, closure of the Early Learning Center, and the retrenchment of several faculty members. The current President of KU, Javier Cevallos, also took his post in 2002. To give you a sense of the story of budget crisis at KU, I want to begin with a rather long excerpt from Cevallos’s very first State of the University address in August 2002:

This [fulfilling the mission of the University] becomes particularly challenging in light of the fact that, as anticipated, the state legislature passed, and the governor signed, a budget that reduced the State System’s appropriation by 3 percent. Our share of the cut amounted, in effect, to a 3.5 percent reduction. In order to mitigate this reduction, the Board of Governors raised the tuition for in-state undergraduate students by 9 percent. This was a very difficult and bold decision and helps us in a significant way. But we still need to find additional funds. When we look at our growth in expenditure requirements, resulting from a variety of issues; such as inflation, contractual obligations, negotiated salaries, it far exceeds this increase, leaving us with a shortfall of $2.5 million. Last spring, when the campus was informed about the Governor’s budget request, we immediately began modeling what the impact would be. At that time, it appeared it would be in the range of $2 million to $3.6 million. With this information we put a budget reduction process in place to remove $2 million from the base budget and to fund any remaining deficit from emergency reserves. This plan was based on the best information and modeling available. Since the cuts had to be implemented prior to the beginning of the fiscal year on July 1, it was necessary to trim the $2 million up front. These reductions, as you know so well, affected the entire campus. This approach offered KU the assurance that only the minimum necessary would be cut and proper planning time would be available to review all reasonable options. The Strategic Planning Budget Subcommittee, a standing committee of University Senate and part of our shared governance, was instrumental in the decision to move in this direction, and I will continue to work with this committee as we look for ways to trim the additional $500,000 from the base budget.

As a new faculty member, Cevallos’s words, were cause for concern. I had just moved to Allentown, PA from Washington, DC to take on a position in the English department teaching first-year writing and composition. I bought a row house for what amounted to a song – it was before the housing bubble got into full swing. Even so, I was barely able to secure a mortgage for the $56,000 price tag after stitching together adjunct teaching jobs and other low-wage jobs for several years. “Oh, shit,” was all I could think as I listened to this freshman president layout the “crisis.”

That first year was a blur. Any regional state university faculty member knows that the workload can make you question whether you made a mistake taking the job. But the students were (and are) awesome. Many, if not most, of them are first-generation college students from middle and working class families. They tend to be students who have jobs and pay for most or all of their own education. These are not the privileged brats from Hollywood representations of college life. I took the job at Kutztown in large part because I wanted to work with these students – students who could have grown up down the street from me in my home town of Utica, NY.

The other thing that persuaded me to take the job at KU was that faculty were unionized. In my two years adjuncting at The George Washington University in DC, I was paid $1500 a class with no health benefits and little job security beyond the goodwill of the Director of Writing. By my second month of teaching at GW, I joined efforts to unionize the university’s adjuncts and graduate teaching assistants. I also did a short stint at DC headquarters of the American Federation of Teachers researching adjunct provisions in faculty union contracts across the U.S. As part of that research, I learned of an independent union in Pennsylvania – the Association of Pennsylvania State College and University Faculties (APSCUF) – and how that union had probably the strongest protections for temporary faculty in the country. When I found out that the faculty union at Kutztown was APSCUF, I was pretty happy that I was offered a job there. I immediately became active in our local chapter and was elected at my department’s representative to APSCUF-KU’s representative council at the end of my first year.

As all of you know, we face a difficult budgetary situation. The situation across the nation has forced most states to reduce, in many cases drastically, their allocations to education. This is the second year in a row that we face reductions, and those have had an impact in our daily work. All of you have been asked to do more with less, and I want to thank you for the commitment and dedication you have shown to this institution and to our students. But we must remain optimistic. In fact, the economy is starting to turn around, and things will get better. As the budget picture clears, and as we find new revenues, we will resume investing in the future.

Cevallos’s address set a somber tone for the coming academic year and sent new waves of concern through the faculty and staff. The fall 2003 semester also brought with it the beginning of contract negotiations. Our contract would expire on June 30, 2004 and anyone with any union experience recognized that all the talk about cuts to education and “economic crisis” signaled that we were in for a fight. And we were. Those contract negotiations were one of the most difficult in the history of the union and resulted in what then APSCUF president Bill Fulmer called a “bare bones contract.” That was putting it nicely. The union signed a contract that basically rolled back several of the gains faculty had made over the years (I’ll leave the specifics for another time. For more, see my article “You Can’t Get There from Here: Higher Education, Labor Activism, and Challenges of Neoliberal Globalization” in Activism and Rhetoric: Theories and Contexts for Political Engagement ). But more than that, once the contract began to leak out, there was an exodus of faculty at or near retirement who chose to retire with their benefits intact. English lost 12 faculty members that year – nearly a third of our department. Those faculty lines that were replaced were replaced by temporary faculty; shortly after, the university issued a freeze on tenure-track hiring.

Over the next six years, Kutztown University’s administration would consistently and repeatedly return to the theme of “the budget crisis” as an umbrella to account for several significant, if not transformational, changes in the university. Kutztown’s student body increased from 8,268 in 2002 to 10,700 in the fall of 2010 – that’s about a 25% increase in the number of students. At the same time, the university built the Academic Forum – aka the “large classroom building” or “the Barn” – which would dramatically increase the number of large classrooms on campus. The Forum has three classrooms that seat 85 students, three that seat 175, and one that seats 200. Historically, Kutztown was an attractive choice for many students because it boasted smaller classes and better access to faculty. The Academic Forum signaled a departure from the University’s roots and would set the stage for a corporate model of higher education.

As the years passed, I along with a group of newer faculty were elected to our union’s local Executive Committee. As we learned more about the union, our contract, and the inner workings of the university we began to seriously question the administration’s claims that it was in financial straits. The numbers just didn’t add up. Think about it. A large number of faculty at the top of the pay scale left; if they were replaced, they were replaced with temporary faculty members at the bottom of the pay scale. The number of students increased by 25% at the same time that class size kept increasing. The State System of Higher Education refers to this as an increase in “faculty productivity,” which means that on average each faculty member teaches a larger number of students (gotta love the industrial management language those people use). Our back of the envelope math suggested that the university should be running surpluses, not deficits. And yet, the university’s books seemed to support the administration’s argument that they were in financial trouble. It just didn’t make sense.

From the Local to the Global; or, Welcome to the Class War

I start with this extended narrative about our local situation at Kutztown University in part because that is generally how we experience social, economic, and political policy. What seem like local issues or problems are more often than not connected to much bigger agendas. That is not to say that the local is simply a reflection of what politicians or corporate CEOs dream up in their think tanks and board rooms. Sometimes leaders at the local level are consciously championing a particular political, economic, or social ideology; at other times, local leaders simply act within their existing constraints, as passive pragmatists. If there are serious budgetary shortfalls, these passive pragmatists don’t try to understand why there are budget shortfalls or how they got to that point. They take the shortfalls as just a fact that they have to negotiate around. They can also see themselves as “victims” with little control over bigger issues. These are the folks that argue that “times are tough, so we all have to just do the best we can with what we have.” KU’s President Cevallos was pretty consistent in positioning himself as a well-meaning, passive pragmatist.

But, just as our current economic crisis did not “just happen” as if it were in the same category of the tsunami that hit Japan, “budget crises” at institutions like KU are not natural. We know that Wall Street caused the crisis thanks to the critical reporting of people like Michael Lewis and organizations like ProPublica. And yet, while the current economic crisis seemed to hit like a storm, “crisis” has slowly been creeping into the fabric of our everyday lives. If our current economic crisis was like a storm, we have yet to understand how “crisis” is like global warming that is harder to see, but nonetheless contributes to the severity of each “storm” that heads our way.

In her book The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein documents the rise of a radical economic theory rooted in the writings of the “grand guru of the movement for unfettered capitalism and the man credited with writing the rulebook for the contemporary, hypermobile global economy,” Milton Friedman (4). This radical economic theory boils down to a massive transfer of public resources to the private sphere…that is, to corporations and the super-rich. Klein shares a selection from Friedman’s influential essay, Capitalism and Freedom (1962) as a window into his ideology:

only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our base function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable (qtd, in Klein, 6).

Friedman and the right-wing think tanks his work inspired did just that: they built up a stockpile of “free-market” policy alternatives designed to redistribute public wealth into the hands of corporate profiteers. Klein shows us how Friedman’s thinking and policy alternatives were applied to a devastated New Orleans in the wake of Katrina. In a December 2005 op-ed in The Wall Street Journal, a 93 year-old Friedman wrote:

Most New Orleans schools are in ruins, as are the homes of the children who have attended them. The children are now scattered all over the country. This is a tragedy. It is also an opportunity to radically reform the educational system (Friedman).

Friedman points to the fact that 73 out of 120 of New Orleans public schools were “failing” based on the state’s own educational standards. The problem, according to Friedman, stemmed from what he called a “government monopoly” of education. In language that will sound all-too-familiar in our post-Tea Party political environment, here’s how Friedman stated the problem:

New Orleans schools were failing for the same reason that schools are failing in other large cities, because the schools are owned and operated by the government. Government decides what is to be produced and who is to consume its products, generally assigning students to schools by their residence. The only recourse of dissatisfied parents is to change their residence or give up the government subsidy and pay for their children’s schooling twice, once in taxes and once in tuition. This top-down organization works no better in the U.S. than it did in the Soviet Union or East Germany (Friedman).

Friedman’s solution? Pretty much the only solution radical free-marketeers have to offer: vouchers. Vouchers not to supplement the existing system, but a “permanent reform” that would eliminate all public education. In other words, turn education into a commodity and submit it to the rules of Wall Street. Predictably, Friedman sees teachers’ unions as enemies of vouchers and who currently control the “government monopoly” and are “determined to preserve that control, and will go to almost any lengths to do so.” As Klein explains, however,

Friedman’s radical idea was that instead of spending a portion of the billions of dollars in reconstruction money on rebuilding and improving New Orleans’ existing public school system, the government should provide families with vouchers, which they could spend at private institutions, many run at a profit, that would be subsidized by the state (5).

Put another way, Friedmanites wanted to use the crisis as an opportunity to destroy the public school system and put public dollars in the hands of corporations. And that’s the game plan. Naomi Klein calls these “orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities, ‘disaster capitalism’.”

The thing about “disaster capitalism” is that it’s not just for natural disasters anymore. Over the past couple of decades, we’ve seen a persistent effort to defund the public sphere and shift resources to the private sector. In short, right-wing free-marketeers have figured out that you can create disasters in the laboratory of state and national politics. If you starve public institutions and programs enough, they will begin to fail. When they begin to fail, all you have to do is point out they are failing because they are “government monopolies.” But how do you “fix” these failing institutions? The free-marketeers simply reach into their stockpile of free-market fixes as the only ideas “lying around.” It a formula we’re now all too familiar with as Congressman Paul Ryan of Wisconsin unleashes his “Roadmap for America’s Future,” which promises to privatize just about everything from schools, to Social Security, to Medicare.

In a February 2011 Op-Ed piece, “Shock Doctrine, U.S.A.,” Robert Reich saw the connections between the shock doctrine that Klein documented and the attack on the public sector, collective bargaining, and working families that began in Wisconsin under newly elected Gov. Scott Walker. Reich argued that in Wisconsin, “the shock doctrine is on full display.”

In recent weeks, Madison has been the scene of large demonstrations against the governor’s budget bill, which would deny collective bargaining rights to public sector workers. Gov. Scott Walker claims that he needs to pass his bill to deal with the state’s fiscal problems. But his attack on unions has nothing to do with the budget. In fact, those unions have already indicated their willingness to make substantial concessions – an offer the governor has rejected.

What’s happening in Wisconsin is, instead, a power grab – an attempt to exploit the fiscal crisis to destroy the last major counterweight to the political power of corporations and the wealthy.

Reich point out that the bill gives the Governor the right to privatize state resources – heating and cooling plants in particular – and to “make sweeping cuts in health coverage for low income families without having to go through the normal legislative process.” Reich held out the possibility that the massive protests in Wisconsin “may have given pause to other Republican governors, who seem to be backing off similar moves.” Those Republican governors may have paused their efforts; but since February, Republican governors have shifted their attacks on working families into overdrive. On June 30th, Pennsylvania’s own Republican governor and his Republican legislature were successful in passing the Keystone state’s version of Wisconsin’s draconian budget. No, things haven’t gotten any better.

All of the Republican attacks on working families are working within the same “shock doctrine” frame. In each case, the “budget crisis” is being used to force through fundamental transformations in the very fabric of public life. But we’re not simply talking about doing things differently; we’re talking about taking resources and wealth from the public sphere and giving it to corporations and what Rick Smith correctly refers to as the “wealth class.” The fact remains that the current budget crisis storm has been brewing for years, if not decades, before Wall Street drove us into the ditch. Republican policy since at least the 1980s has been to underfund public institutions and resources like public schools, state colleges and universities, affordable housing, disability services, elder care, and the list goes on. Once they have sufficiently underfunded the public sector, the public sector appears to be “in crisis” as “bloated” as “too expensive.” In reality, what has happened is that Republicans – with the help of many Democrats – have been on a privatization bender and they just can seem to stop.

There is one more piece of the shock doctrine story I want to share before I turn back to Kutztown University. The fact remains that there is no lack of wealth or resources even in the wake of the greatest economic downturn since the Great Depression. That is, wealth did not evaporate. In many cases, wealth simply has been given away to corporations and the wealth class as I just argued. But, our current “crisis” has also revealed that right-wing-minded politicians and institutional leaders are using the shock doctrine as a strategy to dismantle the public sector when there are sufficient resources. Gov. Corbett’s insistence that he is holding fast to his draconian budget despite the fact, according to PA Senator Vincent Hughes, that Pennsylvania is sitting on a $750 million + surplus thanks to higher than expected tax revenue. Gov. Corbett and the Republican dominated legislature insisted that it would not use any of the surplus to lessen their cuts to public schools or programs such as Adult Basic. And if that were not enough, the Republicans ended up passing a budget with deeper cuts in the budget than even our slash-and-burn governor wanted. These actions have exposed the myth of the budget crisis. If you have millions of dollars in the bank but claim you are broke you’re just plain lying. The Republicans have purposely withheld public money to preserve their vision of a budget crisis. But this myth is nothing more than a calculated political strategy to facilitate their thirst for more public blood.

Blowing the Lid of a University’s Budget Fantasies

During the 2010-2011 academic year, I served as the Vice President of our local chapter of APSCUF. As Vice President, I chaired our monthly Meet and Discuss meetings with management. This was the same year that Kutztown University’s administration, led by President Cevallos, chose to begin the formal process of retrechment — read: laying off faculty members, closing programs, and cutting budgets. Officially, they decided to pursue retrenchment because of the “budget crisis.” Initially, the administration was looking to retrench over fifty faculty members. Thanks to the work of our union leadership, were able to reduce that number to six — nine if you count the people who chose to leave before they were formally retrenched. However, we’re still talking about putting people and their families out on the street, so reducing to six the number of faculty retrenched is nothing to celebrate.

Throughout the year we dug into budget data with the help of staff from the APSCUF state office. We were able to peel back the curtain the administration’s budget crisis myths to a certain degree. For example, two members of our Executive Committee, Ken Ehrensal and Glenn Richardson, tracked KU’s budget for the fifteen previous years then released a report this past March called “Show Us the Money!: An APSCUF-KU Response to the Discussion of KU’s Budget Crisis.” Their analysis found:

Inflation and the growth of the University since the mid-1990s has masked significant budget cuts to the core mission (instruction) of KU.

If Instructional Costs (adjusted for inflation) were the same as they were in 1995, KU would be spending an additional $12 million per year on instruction.

As cost savings were realized in instructional costs, rather than reducing the overall budget, those dollars were diverted to non-instructional uses.

As Instructional Costs continue to shrink, all increases in Revenues are spent on Ever-Growing Non-Instructional Costs.

“Show Us the Money!” documented an intentional, creeping defunding of the core mission of the university…in short, we finally had data that demonstrated KU’s systematic defunding of instruction. And like Al Gore with his global warming slide-show, we had our own slide show that graphically demonstrated the pattern using PASSHE’s own data. “Show Us the Money!” was useful in making our case to the administration that they are cutting the wrong sector of the university. In effect, academics had already taken a 20% cut over 15 years. The “bloat” was not in the academic budget. And, we found out, that Kutztown actually had one of the lowest faculty costs in the State System. Once again, we were back at the question: where the hell is all the money?

At an April 6th Board of Governors’ budget meeting an Assistant Vice President for Finance presented a slide containing new budget projections based upon a 30% cut in PASSHE funding and a 10% increase in tuition. As part of that presentation the Assistant Vice President for Finance presented a slide listing all 14 PASSHE universities’ “Unrestricted Net Assets Available” and the funds needed to cover a budget gap caused by a 30% budget cut over the next two academic years.

“Unrestricted Net Assets” is the PASSHE Board of Governor’s term for “all funds over which the University can exercise discretion and may be used to meet the general financial requirements of the institutions” (Board of Governors Policy 2011-01). In other words, it refers to the money over which the President of a university and his staff can do with as they see fit. Here is the slide of the Unrestricted Net Assets at all of the PASSHE schools that was presented to the Board of Governors:

Kutztown University came in second behind West Chester in the total Unrestricted Net Assets: $29 million dollars. That’s right, a SURPLUS of $29 million dollars. We now had concrete proof that Kutztown University was sitting on a $29 million pot of gold while it cried poverty in public. President Cevallos and his staff retold their story of the university’s budget crisis, a story that was uncritically printed in most of the regional newspapers. Here’s how the Reading Eagle reported the story in March 2010:

Kutztown University is facing its worst financial crisis in memory – one that will require severe budget cuts to avoid multimillion-dollar deficits over the next four years.

The university must trim spending by up to 10 percent over the next two years and is looking at every part of its operations – from academics to campus maintenance to administration – a process that will continue over the next few months, KU officials said.

There likely will be staff cuts, and while the university wants to avoid eliminating any majors, officials acknowledge that, too, is a possibility.

“I’ve never seen it this bad, with a projected deficit of this magnitude and longevity, so we’re looking at everything,” said Gerald L. Silberman, vice president of administration and finance, who has been at KU for 20 years.

The university projects deficits of more than $4 million in 2010-11, $11 million in 2011-12, $18.6 million in 2012-13 and $22.4 million in 2013-14.

It’s a good story, right? I mean, it mirrored the national economic crisis caused by Wall Street and it was already the major frame in the popular consciousness. Only one problem, Kutztown’s “worst financial crisis in memory” was a crock. A myth. A fabrication. Even in the midst of the greatest economic crisis since the Great Depression, Kutztown University was sitting on a pile of cash. How was this possible?

Like the Wall Street induced economic collapse, there was nothing “natural” about it. It’s all in how you keep your books.

After learning that KU was flush with cash, I asked that both President Cevallos and Vice President of Administration and Finance, Gerald Silberman attend the last Meet and Discuss of the academic year on May 9th. We wanted an explanation. In the meantime, some fabulous APSCUF staffers were able to find the $29 million dollars in KU’s official audited books. It turns out that you could find the $29 million if you added together several numbers from different parts of the books and then subtracted another. In short, if you didn’t know what you were looking for, you wouldn’t find it.

That last Meet and Discuss was heated as we questioned President Cevallos about the $29 million dollars, it became apparent that he and his administrative team were not merely the passive pragmatists he projected. For years, Cevallos dismissed faculty and students who questioned how the university could have a budget crisis when new buildings are going up all over campus and the university is investing in new signs and landscaping like they were going out of style. Cevallos would argue, basically, that his hands were tied. Money from one fund — for example, money from the State for particular buildings — could not legally be used to supplement academics. He made this case for years. From the way he made it sound, there were two pots of money with legal firewalls in between. He would quote State statutes and PASSHE Board of Governors’ policies to support his claims. However, at the table on that late May 9th afternoon, the game was up. There were three pots of money, not two. That third pot was well-hidden across the University’s books.

Cevallos and his financial team were effectively squirrelling away money for special projects — projects that helped fulfill his unofficial vision of the university. These projects include buildings, renovations, expansion. It finally made sense why KUs president would refuse to answer the union’s requests for a clearly articulated vision for the university and for a transparency of process. The vision we — faculty, staff, students, community members — were asked to believe was one of crisis and hard choices. Were were to see him as a reluctant executioner, one who wished he didn’t have to retrench tenured faculty members, eliminate the University’s highly acclaimed Advising Center, or send students enrolled in the Early Learning Center packing. We were supposed to see him as a victim as he brought the ax down upon the block.

On May 9th, however, we pushed him to own up to the fact that what he was doing was socking money away for pet projects while crying poverty. He was at the helm creating crisis after crisis by removing chunks of money from the University’s general fund so that it would appear that Kutztown had less money than it actually had. In the midst of one of our several heated exchanges, I said that he lied about the financial health of the university and used his manufactured crisis to strip faculty of their tenure and close programs he wanted to close. I argued that he used his manufactured crisis as cover to carry out a private plan for transforming the university. And, for once, he actually took ownership. He said, “yes, I made those choices” adding that he would make them again. There it was.

The debate over the Pennsylvania budget — from Corbett’s initial draconian budget proposal back on March 8th to the final hours of debate before Governor Corbett signed the budget into law just minutes before midnight on June 30th — has felt like another version of Kutztown’s budget crisis and vice versa. At my last Meet and Discuss meeting, I heard Cevallos and his team use the identical language that Corbett and PA Republican legislators have been mouthing for months.

Make no mistake, the shock doctrine has become the new normal, folks. The narrative of crisis is nothing but a bottle of snake oil these hucksters are pushing on us to gain our compliance. If we believe there is nothing we can do but take our medicine and get back to (looking for) work, they can pocket the wealth that was once held in common and remake the world in their image. We’re better than that. And, frankly, there is nowhere left to hide; no sand in which to stick our heads.

I certainly do not have any easy answers. Our only hope is to organize and to say no to hucksters. To remember that the Capitol is our house, that democracy is not a spectator sport, and what’s at stake is our future and the future of our children. No more excuses. Off the couch.

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